Jamie Dimon says JPMorgan will be 'much more aggressive' on acquisitions just days after Morgan Stanley revealed plans to buy E-Trade
- JPMorgan execs provided new details on plans to grow the bank's wealth and asset management businesses.
- The Wall Street bank is considering M&A as a core part of its growth strategy for asset and wealth management for the next decade. It also plans to hire more than 500 front-office employees in that division this year.
- "We're going to be much more aggressive in acquisitions across the board," JPMorgan CEO Jamie Dimon said at the end of the bank's annual investor day presentation on Tuesday.
- JPMorgan in December restructured its wealth management business to better compete against the traditional US wirehouses like Morgan Stanley and Bank of America's Merrill Lynch Wealth Management.
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JPMorgan is looking at possible M&A to boost its wealth and asset management business, executives at the firm said on Tuesday, comments that come on the heels of a rush of deal announcements.
"We're going to be much more aggressive in acquisitions across the board," JPMorgan Chief Executive Jamie Dimon told investors and analysts at the bank's annual investor day.
The bank laid out its plans just days after rival Morgan Stanley said it would buy discount brokerage E-Trade for $13 billion and asset management giants Franklin Resources and Legg Mason announced a $4.5 billion merger.
Industry dynamics like investors plowing money into passive investments, rock-bottom customer fees, "mid-tier managers being squeezed,'" and operating in the late innings of a historically long bull market are all conditions that JPMorgan flagged as advantageous to M&A right now.
"We're looking at everything," Mary Callahan Erdoes, the chief executive of the asset and wealth management business line, said in prepared remarks, referring to M&A possibilities. "But we're looking for adjacent capabilities. We're not looking for scale. We don't need it. We've got what we need, we want to just keep growing what we have. We're very selective."
JPMorgan also plans to hire more than 500 front-office wealth and asset management staffers this year, and expand its US presence.
The firm's hiring plans encompass both financial advisers and other investment professionals. Globally, JPMorgan has around 1,000 investment specialists across asset management, and 6,500 wealth advisers. In the US, it has some 3,700 advisers across 5,000 branches.
Across the US, it plans to expand between this year and 2021 in 14 areas including parts of Alabama, Nebraska, and Iowa, where it currently has no branch presence.
The wealth business also plans to grow its footprint in areas including Minneapolis, Massachusetts, and South Carolina.
JPMorgan executives also said the bank would focus on expanding its private bank globally, growing asset management, and building out alternative investment offerings.
An aggressive wealth focus for JPMorgan - and everyone else
JPMorgan's recent overhaul and new focus on the business comes as wealth management and the traditional brokerage space has morphed into a battleground for US firms.
The industry has become increasingly crowded and ultra-competitive, filled with legacy players and new digital entrants vying for the same set of young investors accustomed to low-cost financial services.
Another dimension to the competition is the intergenerational wealth transfer expected over the next decade, and firms are chomping at the bit to expand wealth services and draw in new customers who may one day turn into lucrative wealth management clients.
What many analysts point to as a need for scale has also driven other mega-mergers, like the $26 billion Charles Schwab-TD Ameritrade combination set to close later this year. Charles Schwab also said on Monday that it would acquire a $10.5 billion fixed-income investment manager for an undisclosed amount.
The bank in December said it would form a new unit combining its US wealth management, Chase branch network's financial-advisory business, and You Invest online brokerage businesses. Kristin Lemkau, who was the firm's marketing chief up until December, was appointed to lead the new unit and is now chief executive of US wealth management.
The reorganization, which was first reported by the Wall Street Journal, was an effort to bulk up its position against the traditional US wirehouses, like Morgan Stanley and Bank of America's Merrill Lynch Wealth Management.
JPMorgan's assets under management have trailed those rivals. It manages some $2.4 trillion across both asset and wealth management as of Dec. 31 while Morgan Stanley, for instance, oversees $2.7 trillion in its wealth management business alone.
Before the reorganization, JPMorgan's various wealth businesses were not housed under one unit. The newly formed wealth management business caters to clients with up to $25 million in assets; the private bank for ultra-wealthy clients is separate from the new unit.
Rival banks have recently said they plan to double down on their wealth management businesses. Goldman Sachs said late last month at its first investor day that it planned to add financial advisers in the Americas, its Europe, Middle East, and Africa (EMEA) segment, and in the Asia-Pacific (APAC) region.
